When he was named the Automotive Fleet Professional Fleet Manager of the Year for 2014, Gage Wagoner, Philips' senior manager North American fleet management, said he was "shocked."
"To be included in the list of those luminaries who I looked at and said, 'That's what I aspire to be like,' is really a great honor. Everything they do I want to be that good at," he said. "The recognition is extremely significant because of those people I've worked with who have been my mentors and friends. I've always been deeply, deeply impressed by what they do."
Wagoner received his award during the 2014 Automotive Fleet & Leasing Association (AFLA)'s Conference, which was held at the M Hotel and Casino in Las Vegas.
The AF Professional Fleet Manager of the Year Award was created by Automotive Fleet to recognize an experienced and proficient fleet manager who has demonstrated special business acumen in developing and executing key management policies in all areas. Qualified nominees who are full-time commercial fleet managers, control a company-owned or leased fleet in excess of 100 cars and light trucks combined, and are recognized nationally among their peers for their unique abilities and accomplishments are eligible. The award is presented by Bobit Business Media and sponsored by Wheels Inc. and AFLA.
Charting an Accidental Career
While Wagoner fit all the nominee criteria to a proverbial "T," like most fleet managers, if you asked him he'd tell you that he came to fleet by a combination of circumstance and necessity.
"In 2001, I accepted a position at Philips as a fleet administrator right after completing my master's degree in environmental science. Frankly, my taking the fleet administrator position was out of desperation as there were no jobs in my chosen field at that time in Seattle," he remarked during the September 9 award ceremony.
While it might have been out of "desperation" that he took the job at Philips, fate had been grooming him for it all along.
While an undergrad at the University of Washington, Seattle, he needed a job and took one at a local auto detailer and worked his way up step by step from wash bay attendant to manager of the shop. Moving on from that job to one with a Ford dealer — with the intention of continuing in the auto detailing side of the business — Wagoner became, instead, a lot porter and worked with service, sales, and the fleet department. The owner of the Ford dealership operated a daily rental business, so Wagoner moved to that business for three years and worked his way up to weekend manager.
By this time, Wagoner had finished his bachelor of science degree in urban forestry with the intention of working for a park department, but there weren't any jobs, so he went to work for a landscaping company and quickly took over its fleet of 40 vehicles, which he did for two years. He moved on to another company, running a smaller fleet and managing the landscaping division. He later worked out of fleet for a labor union and a BMW motorcycle dealership. He subsequently earned a master's degree in environmental science. Unable to find work in the field and with a growing family, Wagoner found himself applying for another fleet job.
When he went in for the interview at Philips for a fleet administrator position, Wagoner said that he used the resume he had been submitting for environmental science job applications. His future Philips boss remarked: "Every job you've ever had has been in fleet."
Wagoner gave himself two years in the position, but then good fortune intervened again when his boss Marc Stone told Wagoner that he was moving on to a different position within Philips and encouraged Wagoner to apply for his job.
"After some soul searching, the allure of the higher salary, and, in truth, a continued lack of open environmental positions, I applied for the job," Wagoner said.
While he had never thought of "fleet manager" as a real professional career, Wagoner was now a full-fledged member of the group.
Centralizing the Fleet
Today, the Philips North America fleet is comprised of 4,800 vehicles.
Wagoner has a team of two fleet administrators. Wheels Inc. and LeasePlan USA are Philips' primary fleet management companies and ARI handles some of the company's legacy business.
When Wagoner took over the Philips North American fleet, he faced an immediate challenge: centralizing the fleet at a time when there was no centralized management, HR, or finance.
"I spent my first five years writing service level agreements and getting to know the heads of those individual Philips businesses and selling my team's ability to take over their fleet management. I was really aided by a push from HR to get out of managing fleet, because traditionally they had been left with it. It took several years to gain the confidence of the businesses and to integrate the drivers," he said, adding that this was probably the biggest project he's tackled during his tenure at the fleet. Today, the fleet is fully centralized.
Philips is a diversified technology company, which is comprised of healthcare, consumer lifestyle, and lighting. The company employs more than 22,000 people in North America. Philips is headquartered in Andover, Mass., and Markham, Ontario. The North American Philips companies are affiliates of the Netherlands-based Royal Philips N.V.
Philips North America was formed in 1933 and operates at 55 major facilities in 25 states and three Canadian provinces. North America region sales for 2013 were $9.5 billion, which accounts for more than 30 percent of Philips' global revenue, according to the company.
Even with a decentralized company surrounding it, centralizing fleet operations throughout the entire region has been a win for Wagoner, the fleet, and the company as a whole.
"The biggest gains for my team are efficiency in that every Philips driver is equal," he said. "We have one set of vehicles and one set of expectations and that's regardless of where you fall in Philips, so we're able to meet the demand of any driver because we know the expectations they have for us and conversely the expectations for the driver are clear, so we're able to pretty much to interact in real time to any request from all 4,700 drivers that we can answer at our fingertips. The efficiencies there and the efficiencies with the vehicles and our smaller selector have really bought us a lot of value with our fleet management companies, because, again, easy to manage and a single set of expectations, so our efficiencies gain us this ability to be this really compact and agile department that can handle everything related to fleet."
The company selector is comprised of five models: the Ford Fusion, an upgraded Ford Fusion for managers, Ford Escape front-wheel drive, Ford Escape 4x4, and Dodge Grand Caravan. Employees only have the choice of color and the company does allow personal use.
Driven by TCO
While a number of fleets have taken advantage of today's bullish resale market, shortcycling vehicles to capture maximum value, Wagoner has been doing this as a matter of course since 2005, several years before the current resale boom.
"In 2005, Philips corporate finance put an edict out that regardless of country of origin, we'd move to international financial accounting standards piece, and what this meant was that TRAC leases would be on balance sheet," Wagoner said. "So, at that time, corporate finance and purchasing came to the U.S. and we discussed our opportunities to move to a closed-end style lease, which would be off-balance sheet, so we worked with our vendors and moved into a really large scale adoption of closed-end leases."
This was at a time when the fleet was 100-percent Chrysler products and it was providing drivers with the all-new 300, which had a very high residual.
"We stepped into that in 2005, and not only initiated 13-month leases on new Chrysler 300 models, but cycled out all of our open-end leases and made a substantial amount of capital. We made our conversion to close-end leases for the majority of the fleet in two years," he said. "We've continued that model. There have been times when we've gone to a 36-month lease, and our investigation is fully driven by TCO. Each model-year and during some quarters we review to make sure our TCO calculations are correct."
Of the 3,400 vehicles Wagoner ordered last year, 90-percent were 13-month leases.
Wagoner noted that since he purchases over 3,000 vehicles per year, this gives him a bit of leverage with the OEMs when negotiating leases.
The aggressive shortcycling not only aids in resale and makes purchasing new vehicles more cost-effective, but saves in other high-cost areas as well.
"We've seen some really strong reductions in maintenance costs because we may only do three oil changes and don't have to do brakes or change tires," he said. "We're also able to capitalize on emerging technologies as far as fuel economy go, so we can 'green' up quickly, because we can adopt technologies quickly as they make sense and are financially sound."
One of the soft benefits that Philips sees from the aggressive shortcycling is driver satisfaction. Unlike many other companies, Philips' drivers are getting a new car every year.
"We have a large segment of our driver population who has gotten used to it, because we have good employee retention. Now they're unhappy if they have to keep their cars longer," he said. "We've had other drivers who think getting a new car each year is a waste of time and money, so we take them through the economic side, to show them why this process makes the most sense."
While Wagoner's primary duties are with the North American fleet, he began partnering with global procurement in 2005, and is a member of the Philips Global Fleet Competency Team. One output of his involvement was his authorship of the Global Fleet Policy.
Wagoner found out very quickly that writing specific policies was impractical. Instead, he developed a set of guidelines and instructions that each region could use to develop its own, individualized policies.
Fleet is All About Relationships
Perhaps the biggest piece of conventional wisdom in fleet is that it's a relationship business. This was particularly the case for Wagoner.
His first fleet boss, Marc Stone, continues to be a friend and mentor, and Wagoner credits some of his early success to the warm welcome he received during his first fleet advisory board meeting.
"When I was hired as fleet manager, this position came with a few strings attached," Wagoner recalled. "The one string attached to my new position that I had the greatest reservations about was taking over my former manager's seat on the Chrysler client advisory board, with my first meeting scheduled for a few short months after I had taken over the position."
With some serious reservations and at the insistence of his manager, Wagoner flew to Detroit on his first-ever business trip.
"I checked into the hotel and walked downstairs to the opening social hour very much feeling out of place. Within minutes I had been warmly greeted by Jim Anselmi, Debbie Mize, and Jim McCarthy, among others. Over the next few days, I was made to feel at home, a valuable member of the board, and had my misconceptions about fleet managers, and fleet management as a profession, totally reset by the depth of knowledge, professionalism, sense of humor, and, perhaps, most important the passion demonstrated by those around me."
In total, Wagoner has worked with eight AF Professional Fleet Manager of the Year award recipients on various advisory boards. He currently serves on the Ford and LeasePlan client advisory boards.
"To a fault, the AF Professional Fleet Managers of the Year winners have demonstrated what I experienced at that Chrysler meeting back in 2003: professionalism, dedication to making a positive impact with their fleet community and vendors, a sense of humor, and, most important, the ability to be both an inspiring teacher and student at the same time. They have been and continue to be my role models, my teachers, my friends, and my greatest influence on what I aspire to bring to my company, my position, and the larger fleet community," Wagoner said.
Winning the Award
Wagoner attributes his success — and perhaps the key to why he was chosen as the 2014 AF Professional Fleet Manager of the Year Award — to his "constant drive to learn and to refine and to do better next time. I'm looking for opportunities to achieve more and learn and do better."
It's the drive to be better and solve problems that keeps Wagoner involved with fleet.
"What I enjoy most and what I'm most personally fulfilled by is solving problems," he said. "Those are ones that you use data to solve problems and find best management practices. What I realized with fleet is that there is this endless supply of really good data, but connecting data to the refinement of management practices and good financial decisions, there was some ability for me to come in and make some changes in Philips. So, I thrive on being challenged by new problems."
Wagoner, the reluctant fleet manager, may, in fact, epitomize the quintessential modern fleet manager. "Fleet management is really a business where there is so much data that data management and data acumen is a really valuable skill to have to make sure you're benchmarking and making the right decisions with your fleet," he said. "When I was in graduate school, I attended several academic conferences where the whole point of the conference was to give fellow members the ability to immerse themselves in the most current research and look at the methodology and outcomes and really look at the direction this research was going, and I think to a large extent benchmarking is something we talk about, but it isn't data that we tap into and use. I would have a hope in the future that we take more of an academic mind set and use the strength of our data to provide readily accessible benchmarking data to all fleet managers."
And, while Wagoner is looking ahead, he is also looking back to the beginning of his time at Philips.
"One of my core beliefs is everything you can learn to do, you can learn to do better," he said. "So, we're in a time at Philips we've achieved some of these core goals such as having a common fleet policy and we have very strong vendor relationships, and we're going back through each of these pieces and looking to refine it using our current data. We're looking to take a really deep dive back into policy, into how we do business, how our drivers use cars, and really ensure that in every case we can say that we're best in class."